Cryptocurrency exchange EtherDelta has come under the radar of the Chinese police who is taking legal action against it in relation to what it termed an exit scam, reported via tweets uploaded by Dovey Wan, co-founder at blockchain-focused investment firm, Primitive Ventures.
Per the report, the tweets from Wan, suggested that the exit scam involved the sale of EtherDelta Tokens (EDT), following its acquisition in 2017 by Chinese investors:
“The actual beneficiaries of EtherDelta are all Chinese after ownership transition in 2017 […] Basically [the founder] Zack Coburn sold EtherDelta to a group of Chinese who later issued exchange token $EDT and turned out to be a exit scam. Now furious investors of $EDT whistle blowed to local police the case was recently taking into official investigation process.”
“FYI Chinese police shows no mercy if any crypto scam involved large amount of retail capital,” he added in the tweet.
EtherDelta, originally founded by Zachary Coburn before its acquisition by Chinese investors is a non-custodial cryptocurrency exchange for trading ERC20 tokens via an order book and Ethereum-backed smart contracts.
In a previous report, the cryptocurrency exchange was also faced with legal difficulties backed in 2018 when Zachary Coburn the original founder of the exchange was charged with operating an unregistered securities exchange by the United States Securities and Exchange Commission (SEC), an accusation which is neither admitted nor denied. However, he agreed to pay $13,000 in prejudgement interest and $75,000 penalty.